Adding one more power asset to the pile of insolvency cases, IDBI Bank Limited has taken GVK Power (Goindwal Sahib) Limited to the National Company Law Tribunal (NCLT) seeking insolvency resolution under section 7 of the Insolvency and Bankruptcy Code, 2016.
GVK Goindwal Sahib, which owns a 540-Mw coal-fired power plant in Punjab, is GVK Group’s first subsidiary to be taken to NCLT for failing to repay loans. A consortium of 13 lenders headed by IDBI Bank Ltd had provided Rs 450 billion debt to the GVK subsidiary. Of this, IDBI’s share was Rs 7.34 billion.
The Hyderabad bench of NCLT has posted the matter to October 23, when IDBI’s application for admission of GVK Goindwal Sahib (GVKPGSL) under IBC came up for hearing. The bench has issued notices to the parties concerned.
Although it started commercial operations in April 2016, the company hadn’t been able to run the plant at optimal capacity due non-availability of coal and pending legal issues with the state power utilities. Trouble started even before the completion of the project when the Supreme Court in 2014 cancelled the allotment of coal blocks, including the one allocated to GVK Coal (Tokisud) Private Limited meant for Goindwal Sahib plant.
The IDBI move escaped last week’s status quo orders of the Supreme Court regarding pursuit of insolvency proceedings against power assets, as the application was filed on September 11, a day before the court issued the directive, sources said.
Meanwhile, GVK has initiated fresh steps to get the Goindwal Sahib project back on to the discussion table for a possible settlement with the lenders. The company officials told Business Standard that they were resubmitting the resolution plan and had already met the lead banker in this regard on Wednesday.
“We are submitting a resolution plan to IDBI and are hopeful of a positive outcome,” a GVK official told Business Standard on condition of anonymity.
In May, the company stated that GVKPGSL was working with lenders towards the resolution plan as required by the RBI notification dated February 12, 2018, on the resolution of stressed assets. However, it did not make a headway as some of the consortium members refused to accept the said resolution plan.
It may be recalled that following the de-allocation of coal mine the company management has filed a petition with Punjab State Electricity Regulatory Commission(PSERC) for renegotiation of terms of power purchase agreement involving rate revision, approval for using imported coal, approval for completed capital cost etc. claiming force majeure and change in the law. Based on the company’s claims PSERC had allowed the GVK subsidiary company to run the plant on imported fuels for up to two and half years within which GVKPGSL should make arrangement for coal on long-term basis.
In February, the company has obtained long-term coal linkage through Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) scheme for a significant part of the capacity. Further in March, PSERC has approved provisional fixed charges of Rs 2.20 per unit till the final capital cost was determined.
Last year the Hyderabad-based power and infrastructure group had exited Bangalore Airport project in a bid to bring down the debt and said it would mostly confine to the role of an airport operator. It currently operates the Mumbai Airport and also got the mandate to develop the green-field Navi Mumbai International Airport project.
The stranded power assets, including a couple of gas power projects located in Andhra Pradesh, had contributed to the major portion of its consolidated debt, which stood at around Rs 200 billion. Last year the company was able to report a consolidated profit of Rs 1.92 billion as against a loss of Rs 8.7 billion in the previous year.
Source: Business-Standard